Last month’s jobs gain easily surpassed Wall Street forecasts, dampening recession fears.
Giving markets a much needed boost, official figures showed that non-farm payrolls jumped by 312,000 in December, squashing analysts’ predictions for a 177,000 rise.
This, alongside Federal Reserve Chairman Jerome Powell stating that the central bank would be patient when it comes to raising interest rates, lifted U.S. stocks after a difficult trading day yesterday.
The Dow Jones Industrial Average was up 576 points, or 2.54 percent, to 23,263.03, while the S&P 500 was 3.14 percent higher in late-morning trading.
Paul Ashworth, chief U.S. economist at Capital Economics, said: “The far bigger than expected 312,000 jump in non-farm payrolls in December would seem to make a mockery of market fears of an impending recession.”
He added that despite a dive in a leading manufacturing index released yesterday, the employment report suggests the U.S. economy still has “considerable forward momentum.”
Within the non-farm payroll data, employment in department stores rose by 8,100, while in clothing and accessories stores, it remained unchanged.
The significant rise in non-farm payrolls, however, was not enough to prevent the unemployment rate creeping up from a 49-year-low of 3.7 percent to 3.9 percent.
Economists were quick to point out though that this was mainly down to a 419,000-person increase in the labor force.
“While the unemployment rate increased, it did so for the right reason – more individuals are seeking to enter the labor force since wages are growing and more attractive,” NRF Chief Economist Jack Kleinhenz said.
As for wages, which have been lagging behind the rest of the economy, there were signs that they were catching up. Average hourly earnings increased by 0.4 percent last month, pushing the annual growth rate from 3.1 percent to a near-decade high of 3.2 percent.